Author: Marina Zosya

Creative Marketing, or The Frustrated CFO Attends Louis XIII Legacy Experience


Louis-XIII-Barrels-300x239General public, constantly bombarded by advertising campaigns from TV screens, Internet sites, pages of periodicals, billboards, transportation exterior, etc. is rarely aware of the fine correlation between the commercials it is forced to absorb and the economic nature of the products being promoted to them. The majority of consumers don't realize that Mad Men, both real and fictional, are after the largest chunk of their disposable incomes – the money spent on what's known in the economic science as "normal" goods, i.e. every-day necessities with a moderate income elasticity of demand.

In plain words it means that when people's wealth increases, the demand for the normal goods increases at a slower than income rate. It's not like you are going to start using twice as much detergent if your salary doubles, but you may switch to a more expensive brand, which supposedly delivers cleaner and brighter clothes. And that's why commercial sequences look like the war of brands: Progressive vs. Geico aka Flo vs. Gekko; Advil vs. Alive, Post vs. Kellogg's, etc.

On the other hand, marketing for "inferior" goods (i.e. those for which demand decreases as income increases) is basically non-existent. It would be a waste of the advertising budget to promote items that sell themselves anyway because they are the cheapest in their product groups. For a store-brand quart of milk at 99 cents you don't even need too much color on the packaging. On the other hand, to sell a quart of the fancy Farmland Special Request Skim Plus Milk for $2.99 you need it to stand out on the shelf in its purple lettering and black cow spots.

What about even fancier, extraordinarily expensive items? The ones labeled by the economists as luxury goods, for which demand inexplicably increases more than proportionately when income rises? We don't see much advertisement for them either. Yes, from time to time De Beers injects a bit of its A Diamond Is Forever campaign into various media. And on a rare occasion you can catch on TV one of those sexist (targeted exclusively to men) Porsche commercials. If you are a tennis fan watching one of the Majors you get to see Roger Federer in a Rolex ad… rarely.

But, have you ever seen a broadcast spot for a $12,000 Chanel suit? A $350,000 Harry Winston diamond necklace? A 73-foot ocean yacht (about $1.3 mil)? A Bentley (average price $200,000)? Louis Roederer Cristal Rose 2005 ($600 a bottle)? How about a public notice for the upcoming Sotheby's Fine Art auction?

One may think, "Well, if I had this kind of money, I would've found those things." Who doesn't want a yacht with a polished mahogany stateroom? Or a rare car? Yet, it would be a mistake to think that these items don't require any form of marketing or that they are above competition. Yes, rappers drink and rhyme about Cristal, but according to many experts the champagne that can really blow your mind is Dom Perignon White Gold Jeroboam, which can demand an auction price of $40,000 per bottle. Imagine that you can afford it – how would you know about its existence? These products are exclusive rarities that occupy narrow niche markets. Hence, they call for innovative, targeted marketing tailored for creating brand awareness.

Enter Remy Martin Fine Champagne Cognac (est. 1724) and it's most privileged drink – Louis XIII cognac.  Blended from 1200 eaux-de-vie aged from 40 to 100 years, in very special 300-year-old oak barrels hidden in a secret cellar in Grande Champagne region of Cognac, France, and, when deemed ready by the Cellar Master, bottled into proprietary Baccarat crystal decanters – this is as high-end as brandy can get and its price reflects it: a "regular" bottle goes for $3,000 and limited editions (such as Rare Cask or Black Pearl) can fetch anywhere between $22,000 and $44,000 per bottle.  And I can personally vouch that it worth every penny.  I mean, that shit will spoil you for life: you try it and you don't want to drink any other brown-colored grape liquor no more.

It was the fast-growing and hungry for new clients EastWest Bank who invited me to participate in the cognac's exclusive (20 people) degustation event jointly hosted by the bank and "the brand ambassador" (i.e. a good-looking English-speaking Remy Martin's representative) in a building in SoHo formerly owned by Charging Bull sculptor Arturo Di Modica and temporarily converted to accommodate the  Louis XIII presentation.  It was an installment in Remy Martin's marketing campaign called Louis XIII Legacy Experience, which has been on the World Tour for six years, rolling through the cities with major concentration of wealth – New York, Los Angeles, London, Dubai, etc. 

This is how it works:  In each location, the brand's representatives contact high-net-worth individuals, heads of private financial institutions, high-tech moguls, distributors of other luxury goods (Ferrari and Porsche dealerships are always targets), etc. and offer them an opportunity to host an exclusive event for their most important customers, prospective clients, business partners, or other wealthy friends.  The price tag… NOTHING!  

It's truly a marketing tool.  What Remy Martin gets out of it is: 1.) The brand recognition through introduction of the drink to people who may never heard of it before; 2.) Additional entries in their contact list – one of the leggy hostesses meets you at the entrance with her iPad and asks you to share your business card and/or an email with Louis XIII; 3.)  Spot orders of both "standard" and special-edition bottles of the famous drink - I know for a fact that before our event was over all Rare Cask and Black Pearl bottles on display were sold.

With no price tag attached, what does the Experience offers to guests? 

The event starts with a gathering/mingling part.  In our case, quite excellent Piper-Heidsieck champagne (with refills) was passed cocktail-style accompanied by extraordinary finger-food trays (I wish I knew who the caterers were), while people talk to each other, looked at the displays of special Louis XIII, and read leaflets about the silent auction of silkscreens and lithographs made in Andy Warhol's Factory, which lined the walls of the drawing hall (an NYC-specific added benefit). 

After that you are taken to a screening room (red semi-circular couches) for a presentation of a film that tells the story of Remy Martin and its highest-priced product.  Next, we were led to the underground level (a fortunate feature of this particular venue – it looks like a cellar with exposed brickwork and arches), where a surprise display was revealed: an actual 300-year-old barrel, previously used to age the cognac for 100 years and now retired due to its diminished quality. 

Over this artifact a 750-ml bottle of Louis XIII de Remy Martin was opened and pored into the proprietary Baccarat glasses (if a group is larger and/or more valuable to the organizers, Le Jeroboam, 3-liters-full, is used).  Warning you not to down your drink right away, the "ambassador" gives a mini lesson on the proper tasting of the dark-amber liquid.  Let me relate the first bit: like with many other drinks, you start with the nose.  The difference is that, instead of trying to squeeze as much of your face into the glass as you can, you experience your first nose of this incredible cognac at the stomach level.  As a person with chronic respiratory aggravations, I was very doubtful - I didn't expect to smell anything.  But let me tell you: the power and the complexity of that aroma…  It will probably take me extra 100 words to describe it.

While recovering from the magic of swallowing the drink, you are invited to place an order for your own bottle of Louis XIII complemented by two glasses of the same type you are still holding in your hand.  With that comes a special perk from the ambassador: if you order a bottle from him you get your initials engraved on the decanter. 

I know that on some occasions the Legacy Experience rolls into a dinner, but for us that was it.  Still, what an amazing adventure!  Thank you, EastWest Bank! Everyone leaves feeling incredibly grateful to whoever invited them to participate in this memorable gathering.                   

Are you grasping the commercial meaning of this?  This is genius!  Nothing short of a double-impact marketing: Remy Martin broadens its brand awareness and sells some of its ultra-expensive booze, while the co-hosts, being the actual invitors, make a lasting impression and raise their customers' satisfaction.

In this predominately business crowd, one guest of a guest was an artist. And, of course, she was the one who has recognized the familiar traits in the creation of Louis XIII cognac: a single person, the Cellar Master (presently, Pierrette Trichet – the first female to hold the position), relying purely on her talent and experience, selects, blends, and combines eaux-de-vie to create a drinkable masterpiece - that's art. Well, it takes one to know one.  All I can say is that bringing a luxury product to a proper audience is not a trivial task either and the Legacy Experience is as good as it gets.

Quote of the Day: Salinger on Class Division


"It's really hard to be roommates with people if your suitcases are much better than theirs."

                                                                        J.D. Salinger

CFO Folklore: Don’t Let the Boss Argue Your Case for You


Opposite DirectionsIn a small business with a flat organizational structure, where every exec performs 10-15 jobs, there is always a possibility of timeline conflicts.  It's like cooking ten dishes on a four-ring range: eventually you run into a point when the same burner is needed for two pots.  Which one to put on?  There is really no such a thing as a right decision at times like that – you must simply follow your instincts.

Let's say your are in the final stages of negotiating a Credit Agreement renewal with your main institutional lender.  It's Thursday, 03/13.  You have scheduled a meeting with the bankers, their attorneys, and your own esteemed corporate lawyers for tomorrow afternoon to press on with a few remaining crucial changes before the deal is released for the approval by the bank's Credit Committee on Monday, 03/17. 

At 5 pm your phone rings:  It's your tax attorney hesitantly letting you know that his team must meet with you urgently tomorrow, because they just figured out that the company may have tax exposures in Illinois and Wisconsin; the extensions are due on Monday, 03/17 (somewhat hysterically); and, he is very sorry to tell you, but he is not quite sure about this and that's why they need to seat down and read you into the details of the Code, so that you can express your opinion, because nobody understands the business better than you do.  No, it cannot be in the morning, because it's tax season and everybody's schedule is full as is; only the afternoon is workable for everyone who needs to be there (except you, of course, but who cares).

By the time you hung up, it's too late to reschedule the bank – most bankers leave at 5 pm, just like the government.  Now, you've got a dilemma.  Bank or taxes?  Of course, you can tell the tax lawyers to suck it up and do their well-compensated jobs without getting you involved.  Yet, you cannot – that's not how you do.  But the bank is incredibly important: the last stages of negotiations are the hardest, because nobody wants to give up the last frontiers.  On the other hand, you are literally the only person in the company who can express taxation opinions.  At least the owner has been in a tandem with you on the contest of wills with the bank.  However, he is easily mauled by financial predators if he is left on his own.                  

But what are you going to do?  It's the balancing act – you have to optimize.  You cannot be in two places at the same time.  So you decide that the tax meeting is the one you must attend and send your boss to the other one alone.  And, of course, you prep him on Friday morning.  You go over all important points of the agenda with him and outline your position on every issue (in writing, for better retention).  Then you silently pray to Hermes/Mercury, the patron god of all CFOs, and go on to your appointment.

You don't disturb him during the weekend, but as soon as he shows up at work on Monday (around 1 pm) you pull him into your office.  "Well, tell me," you inquire.  He beams at you: "Oh, it went very well.  They practically accepted all the conditions on the list you gave me.  You should have the amended Term Sheet by tomorrow morning."  You are cautious: "Practically?"  And he clarifies, "There is one item.  They said they couldn't do anything about migrating from weekly reporting to monthly.  But I figured that was okay, right?  Just this one thing?  And what?  It's like a nine-line report, or something?  Probably a few buttons on your system, right?"         

Well, it's actually a 52-line statement with 5 supplemental schedules. It takes two of your staff accountants several hours to update all raw data and 2.5 hours of your valuable time every Friday to compile the reports. This was one of the top 10 most important items you've introduced into the negotiations right from the start.  Of all items that's what he decided to let go?  And what is it with bosses?  Why do they always assume that everything you do is effortless – fast and easy?  Just because you are toiling away without making any fuss?! 

You feel like Zorg from The Fifth Element.  "I am very disappointed!!!" growls Gary Oldman inside you.  If you want something done correctly, you'd better do it yourself!  Unfortunately, you don't have his powerful ZF-1 under your desk.  So, instead of simultaneously throwing flames and blasting freeze-rays, you grab your phone like a weapon and calmly explain, "These weekly reports end up costing you a lot of salaried hours that can be used more productively otherwise.  So, let me call and talk to them about it again."      

Quote of the Week: Again on Ivy Leaguers’ Writing Skills


20131205204227!Harvard_shield-BusinessFrom an actual e-mail of a corporate COO, an HBS alumnus, blind-copied to several bankers, who lost their bids for the company's business, as well as to a few other addressees:

"As you know, we analyzed several competing offers.  One has been accepted and a good faith deposit paid.  All banks were quite detailed and specific in their term sheets.  In order to make both a proper and fair comparison, any uncertain items had to be discounted.  While it might have been useful to fully clarify all conditions and parameters, we made a decision not to allow banks to tweak their offers.  We felt strongly about not creating a Middle Eastern bizarre mentality and having every bank but one ultimately feeling used or abused."

The Frustrated CFO's comment:  Never mind the awkward phrasing and sentence structure.  How about that biased ethnic remark?  Except that it's not.  Well, at least it wasn't meant as such.  I actually asked and was told that somebody used the phrase on the news and that what the COO thought he's heard.  I had to explain that it was a "Middle Eastern bazaar" people referred to as a metaphor for haggling.  I talked him out of making a mess with a retraction.  "Bizarre bazaar… whatever," I said.        

Funny Thing Happened On the Way to Ohio, or That Picture of Your Boss You Posted on facebook


UntitledI've said it before and I'll say it again: all entrepreneurial bosses are the same.  Of course, I don't mean it literally – they are not stamped figurines.  Yes, they are the same in their principal qualities (aggressiveness, single-mindedness, drive, vision, impatience, arrogance, callousness, etc.), but they are also different people with their own psychological makeups,  individual quirks, and human peculiarities.  Some can be informal and approachable, others are aloof and snobbish.  Some can be intellectuals, while others are simple and limited.  Some of them are religious conservatives, others are broad-minded libertarians.  Some are healthy and others suffer from an array of ailments.  Some like spicy food and others cannot stand a hint of curry or garlic in the air.

There is one universally common denominator that definitely unites all business owners, though - they are employers.  And as I wrote in CFO Techniques, one should never cross the line with one's employer, if for no other reason than in appreciation for creating one's job.

So, here is a little anecdote that involves a sociable female business owner, her all-male sales staff, and some spicy food. 

First, let me clarify one thing.  This woman, tough as nails and brutal in her nature, nevertheless strives to present a friendly and cheerful demeanor to the outside world.  Experienced people can see through that veneer and know to watch their steps around her.  However, when you get together eight men, even though subordinate, and one woman, even though a boss, the dynamic gets a little muddled.  I mean, when they are in a gaggle, it's especially difficult for men to suppress the testosterone.  It clouds their judgement and they forget for a hot second what's behind that charming smile. 

Oh, yes, and about the food: she really does like it hot.  You'd be in a restaurant with her, she orders a dish and then asks the waiter, "Is it spicy?"  The waiter smirks, probably thinking, "That skinny bitch will be asking now to make it mild," and answers, "Yes, ma'am, it's very spicy."  And she goes, "Could you, please, ask the chef to make it spicier." (Sometimes I actually consider of giving her a present of Pure Capsaicin Crystals, but I know she's going to try them and I don't want to be responsible for the consequences.)

Back in December, she held a three-day sales summit in the company's NYC headquarters – all salesmen came over from their different locations.  This usually means breakfasts, lunches, and dinners together.  Thankfully, in NYC that's not a problem.  The team enjoyed French-Asian fusion, classic American steakhouse, Korean…  An Italian restaurant is always a must, since the sales person with the most seniority comes from a Bolognese family. 

Unfortunately for the boss-lady, Italian food doesn't offer too many possibilities for extra-spicy.  She orders Shrimp Fra Diavolo over linguine, but it's not doing the job.  Red pepper flakes are asked for and happily received.  She starts shaking the plastic thing over her plate and orangy-red bits sparingly drip out (there is a reason the container is designed this way – one must use the hot stuff with a caution).  That's not enough for her – she starts shaking harder and harder…  until the top flies off and most of the pepper from the bottle ends up in the sauce.  All the men at the table are laughing their heads off – the boss slipped up!  Maitre d' sees it (how can you not, with all that violent shaking?) and immediately runs over, offering to replace the dish.  The lady refuses and laughs lightheartedly with her "boys" about her clumsiness.  She removes some of the pepper excess onto her bread plate and proceeds to eat what, I imagine, is an unbelievably spicy pasta without breaking a sweat.

Six weeks later, the same group of people is on the road visiting their Rust Belt customers.  They started in Pennsylvania and are now on their way to Ohio.  I'm sure my readers understand that the food scene in the industrial towns of Western PA is not quite the same as it is in NYC.  Here you go for Italian because it's probably your best choice.  So, there they are again with dishes that vaguely correspond to the Italian names on the menu.  This time around the owner's sauce is not spicy at all, but the generic plastic bottle with red pepper flakes is already on the table.  She reaches for it and the shaking ensues.  The memory of the NYC debacle is too fresh for the boys not to bring it up: "Be careful, don't shake the top off," a few of them warn.

Let me step aside for a second: Just as the bosses' human qualities differ, so are the ones of the subordinates.  A couple of them are of the self-conscious type – they simply don't want to be inside a public spectacle again.  Others are genuinely concerned about her not spoiling her food.  Yet, there are always those resentful, passive-aggressive employees, who secretly cherish the idea of a boss making a fool of him/herself.  One of those had his iPhone at the ready.

Well, as you probably guessed, the container's top comes flying again and a half of the red pepper flakes ends up on the pasta.  Oh, the childish hilarity!  Everybody laughs – some wholeheartedly, some to cover up the awkwardness.  The prepared dude snaps the picture and immediately posts it on facebook.

A young salesman who told me about the repeat performance of the pepper flakes show was visibly hesitant and uncomfortable with the whole facebook posting part.  I was simply appalled at the disrespect.  And what about the owner/CEO herself?  Did she fire that rude fucker?  Of course not.  The emotions should not interfere with business - it's impossible to replace a high-caliber sales exec overnight.  But I know this woman very well.  She's never going to let it go.  You can see it in her unsmiling eyes when she laughs about the whole thing.  She is on the lookout: as soon as she finds someone else, the insolent fool will be gone.  She will not even flinch; just like she doesn't flinch from the spiciness of her food.